Wall Street Gains After Lower Inflation, IBM Shares Tumble/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ U.S. stocks moved higher Tuesday after inflation cooled more than expected in June, easing concerns about additional Federal Reserve rate hikes. Technology shares rebounded, major banks posted strong earnings, but IBM suffered its steepest stock decline in decades after disappointing quarterly results.

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US Stock Market Today Quick Looks

• S&P 500 gained 0.4%.
• Nasdaq climbed 1% as tech stocks rebounded.
• Dow Jones was little changed.
• June inflation slowed to 3.5%, below expectations.
• Treasury yields fell as investors reduced rate-hike expectations.
• IBM plunged 24.4% after weak earnings.
• Strong bank earnings supported broader market gains.
• Oil prices remained elevated due to Middle East tensions.

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Deep Look

Stocks Recover Following Better-Than-Expected Inflation Data

Wall Street posted modest gains Tuesday after a new inflation report showed consumer prices cooled more than economists expected in June, giving investors renewed confidence that the Federal Reserve may not need to raise interest rates again this month.

The S&P 500 rose 0.4%, recovering part of Monday’s decline.

The Nasdaq Composite gained 1% as technology shares bounced back from recent selling pressure, while the Dow Jones Industrial Average remained nearly flat, slipping just 11 points late in the trading session.

Markets welcomed the latest inflation data even as geopolitical tensions in the Middle East continued pushing oil prices higher.

Lower Inflation Eases Pressure on the Federal Reserve

The Labor Department reported that annual inflation slowed to 3.5% in June, down from 4.2% in May and below economists’ expectations of 3.9%.

The softer inflation reading reduced expectations that the Federal Reserve will raise interest rates at its upcoming policy meeting.

According to CME Group data, traders now see less than a 17% chance of a rate hike later this month, compared with nearly a 42% probability just one day earlier.

Lower interest rate expectations also helped Treasury yields decline.

The yield on the benchmark 10-year Treasury note fell to 4.58% from 4.62% Monday, providing additional support for stocks.

Technology Stocks Bounce Back

Large technology companies rebounded after suffering heavy losses earlier in the week amid renewed concerns about artificial intelligence spending and lofty stock valuations.

Micron Technology climbed 4.6%.

Nvidia gained 4.3% after both companies had posted sharp losses during Monday’s selloff.

Investors continue debating whether massive spending on AI infrastructure—including chips, servers and data centers—will generate enough profits to justify soaring stock prices.

Despite those concerns, Tuesday’s easing inflation report encouraged investors to return to many of the sector’s biggest names.

IBM Suffers Biggest Drop in Decades

IBM weighed heavily on both the Dow Jones Industrial Average and the S&P 500 after its shares plunged 24.4%, marking the company’s worst single-day decline since at least 1972, according to FactSet.

The company disappointed investors after reporting weaker-than-expected results for its software and infrastructure businesses.

Chief Executive Officer Arvind Krishna said customers redirected spending toward hardware purchases ahead of anticipated price increases linked to artificial intelligence demand.

“These conditions require our teams to execute perfectly, and this quarter we faltered,” Krishna wrote.

“We did not adapt and move quickly enough, and numerous large deals failed to close on the timelines we expected, driving the majority of our shortfall.”

The disappointing report overshadowed otherwise strong earnings across much of the financial sector.

Banks Deliver Strong Quarterly Results

Several of the nation’s largest banks reported earnings that exceeded Wall Street expectations.

Among those posting stronger-than-expected profits were:

• Bank of America
• Citigroup
• JPMorgan Chase
• Goldman Sachs
• Wells Fargo

Trading activity remained robust during the quarter, while consumer spending continued showing resilience despite elevated borrowing costs.

Goldman Sachs shares surged 8.3% following its earnings report.

Citigroup, however, fell 4.7% despite also reporting stronger profits than analysts anticipated.

Oil Prices Remain a Key Market Risk

Investors continue monitoring developments in the Middle East as fighting involving the United States and Iran threatens energy markets.

Brent crude oil briefly climbed above $87 per barrel before ending the day at $84.73, up 1.7%.

Oil prices have risen sharply amid concerns that conflict around the Strait of Hormuz could disrupt global energy supplies.

President Donald Trump eased one concern Tuesday by abandoning plans announced a day earlier to impose a 20% fee on cargo moving through the strategic shipping route.

Nevertheless, investors remain cautious that continued instability could reignite inflationary pressures.

Federal Reserve Stays Focused on Inflation

Federal Reserve Chair Kevin Warsh testified before Congress Tuesday, emphasizing that controlling inflation remains the central bank’s top priority.

He pledged to make elevated inflation “a thing of the past” but offered no indication about whether policymakers will adjust interest rates at their next meeting.

The latest inflation report gives the Fed additional flexibility as officials weigh the risks of slowing economic growth against persistent inflation.

Global Markets Also Advance

Markets outside the United States also finished mostly higher.

European indexes posted modest gains after Asian markets closed in positive territory.

Japan’s Nikkei 225 rose 0.7%, helped by a 3.3% gain in SoftBank Group.

Chairman Masayoshi Son dismissed concerns that artificial intelligence investment has entered bubble territory during a speech in Tokyo.

Chinese markets also advanced.

Shanghai’s benchmark index climbed 1.4% after government data showed exports jumped 27% in June compared with one year earlier, driven largely by continued global demand for artificial intelligence chips and advanced technology products.

As earnings season accelerates, investors remain focused on whether corporate profits can justify stock valuations that remain near record highs despite growing geopolitical uncertainty and ongoing questions surrounding the long-term outlook for artificial intelligence investment.

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